Category Archives: Southwest Florida Real Estate

Market updates and news and information about the SW Florida real estate market

Official SW Florida Real Estate September Sales Numbers Show Mixed Signs

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Official sales numbers were released this past week by Florida Realtors and as expected median sales prices fell 3.46% from July as more distressed sales sold in August 2011 than July. Sale prices were up 16.74% from August 2010 which is positive. Listing inventory continues to slide which bolsters prices as well. Last year Lee County had 11,667 combined single family homes from all MLS’s on the market and today we’re down to 7,675 combined. Actually there are less than both numbers because some homes are listed in multiple MLS’s, especially high end homes or homes in Estero, Bonita, San Carlos park where Realtors may belong to more than one MLS and desire additional exposure. Sanibel and Captiva is another example of where agents might list homes in the Sanibel board and the Fort Myers board.

SW Florida Real Estate Homes Closed 2009-2011
SW Florida Single Family Homes Closed

As you can see from the attached charts, even though inventory has been falling, Realtors have been successful at closing high numbers of homes even though many are short sales. This is a testament to the fact buyers are being forced to look at short sales which may take longer to close to find homes in their price range. It is also testament that Realtors are increasing their education to handle these complicated sales, and banks are gearing up to close more of these sales rather than selling through foreclosure.

SW Florida Single Family Sale Prices 2009-August 2011
Single Family Home Sale Prices in SW Florida 2009-2011

While sales prices have declined from their 2011 seasonal highs, they are still significantly higher than last year’s numbers signifying the bottom may be behind us. Before our market reaches for the skies again, we must first repair our fragile economy and create jobs and income growth. Combining that with a coherent, understandable, and definite tax policy will also help settle the real estate market. Congress and presidential politicians keep proposing changes to mortgage deductions, increased capital gains taxes on certain groups of people, and worst of all they’ve failed to extend the National Flood Insurance Program which puts hundreds of thousands of current transactions in jeopardy.

Washington couldn’t script are more harmful strategy to disrupt housing, which is amazing as housing leads to 32% of the nations GDP. There has got to be a better way, and thankfully there is a better way, but it won’t happen until the next election.

So for the next year the nation’s economy and housing market will have its ups and downs and will take its lumps until certainty returns to the market. I never understood why the president proposes raising taxes on certain people and not others. While I’m certainly not rich, nor is any real estate agent I know in SW Florida, I just don’t understand how taxing those that make more money encourages them to work harder or hire more people, which is what our economy really needs right now.

Last week I wasn’t paying attention and I received a speeding ticket. A day later I thought. Hey, if certain people get to pay more taxes because they earn more, then why can’t certain people drive faster than others? If I’m paying more shouldn’t I be allowed to drive faster? Well, it’s a silly argument as we should all obey and drive by the same rules, and so it goes with taxes, we should all pay the same rates. If someone makes more, they automatically pay more. So why should they pay more, and pay a higher rate?

And when companies are taxed at one of the highest rates in the world, why do we wonder when they move operations overseas? Perhaps we should lower taxes and encourage them to come back and hire US workers, which would raise income to the government.

Have you ever wondered why certain corporations move to Delaware or South Dakota? It’s because those states learned to compete with other states they must have lower taxes. It’s about time our Federal government understood this. We are in a global competition. When someone can accurately predict when our government will get its act together, almost anyone will be able to predict the real estate market. Until then, we’ll keep reading the tea leaves and reporting what we see.

 

SW Florida Real Estate September 2011 Official Numbers Released

Florida Real Estate Bargains a Victim of Perception

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We’re writing this article this week two days before official numbers are released, so by the time you read this official numbers will have been released. Absent this knowledge, we expect prices in August to be higher than last year and sales to be down from last year, however sales volume may be higher than July.

SW Florida Real Estate Bargains
Year End Median Sale Prices For Single Family Homes SW Florida

We’ve included a chart of average year end sales prices which is really an average of prices for that given year, not the Dec 31 average price. As you can see, prices fell from their peak in 2005 through 2009 where they stabilized and actually rose in 2010. In 2011 we’ve seen more gains over 2010.

We started writing articles and advertising back in 2009 that Florida was on sale and buyers flocked here in droves looking for bargains from all over the world. Buyers have been competing with each other for the best bargains and in fact many of these properties have seen multiple offers. As you can see from the year end chart, prices are still very affordable and are on par with 1996-1997 prices. If you look at the attached chart you’ll notice prices in July were up 14.33% over last year and up 19.1% over 2009 prices.

Median Sale Prices Single Family Homes in SW Florida
SW Florida Real Estate Prices 2009-2011

We are fielding calls from buyers looking for foreclosures, short sales, and otherwise good bargains. They just finished reading on a website or watching an older YouTube video how another buyer bought a $20,000 condo or $30,000 house close to the beach and they want to come here and buy the same thing.

If you ask any agent in this market I’m sure they’d chuckle because they’re answering some of the very same calls. This is where the perception that Florida is on sale, which it is, collides with reality. The days of buying newer homes for $35,000 are over unless the home has serious defective drywall issues or is gutted. We still have some inexpensive condos for sale. For instance we just listed a bank foreclosure 1 bedroom, 1 bath condo in Mystic Gardens for $27,900 which is a bargain. These deals are becoming fewer and farther between.

Unfortunately buyers from all over are calling and expecting homes close to the beach or on the beach for ridiculously low prices. While it is true back in 2009 we had some seriously under-priced homes from some of the banks, prices have gone up considerably since then. We’re still well below replacement cost in most cases and we’re not headed back to 2005 prices anytime soon, however we are still a bargain.

Florida Real Estate Bargains

I guess there is a difference between a bargain and a steal. The steals are over, but there are fantastic bargains and opportunities in this market if you’re realistic. If a buyer is unrealistic, they’ll suffer the same fate as an unrealistic seller, which is no transaction. A buyer who fails to buy in this market is just as damaged as a seller who overprices and misses the top. While the bottom may be behind us, we’re still close enough to it that we can see it in our rear view mirror and prices today will look like a bargain years from now.

Remember back in time when someone you know once said “Gosh, I should have bought every piece of property I could get my hands on back when prices were lower?” Well, in the future I’m sure there will be those that say, “Gosh, I should have bought everything I could back in 2010 and 2011. Those were the days when there was little competition from new home builders, interest rates were at their lowest, prices were below replacement cost, and at those prices they actually cash flowed.”

It pays to be an educated consumer, whether you’re on the buying or selling end. Remember, money is always made on the “Buy”, not the sell. Inventory is going down. If you’re truly a buyer, learn the market and step up now. I bet you’ll be glad you did.

It’s kind of funny how humans follow the herd mentality. When everyone else is buying, people feel more comfortable buying at the top, but when things are down, people are scared of overpaying. Back in 2005 you were overpaying, but most felt good about their purchases. Look what prices have done since. The smart money is buying and holding today. Failure to land a property now is a wasted opportunity.

Spotlight on Town and River

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SW Florida September 2011 State of the Real Estate Market ReportTown & River is a waterfront community tucked away on the river side of McGregor Blvd on the Fort Myers side of the river.  The community features deep water gulf access lots as well as a fresh water lake offering some nice lakefront views.  Not every home is waterfront, but all enjoy the peace and serenity of South Fort Myers living off historic McGregor Blvd and all the conveniences to everything that comes with it. Spotlight on Town and River.

McGregor Blvd was the original center of town and housing in Fort Myers used to be defined by which side of the street you lived.  While growth has certainly moved eastward, the charm and beauty of McGregor Blvd remain a fixture alongside Thomas Edison’s vision for McGregor Blvd showcasing why Fort Myers is named The City of Palms. It was Thomas Edison after all who was responsible for lining McGregor Blvd with the majestic palms we see today and defines our place in SW Florida history as people from all over come to visit our beaches and gaze at McGregor Blvd and the seemingly endless flow of palm trees as you drive down McGregor.

Spotlight on Town and River
Riverfront Home in Town and River Sold For $1.31 Million in 2011

 

 

River and Pool View of Town and River Home
River and Pool View of Town and River Home

Town & River features some amazing homes.  The highest priced home we could find in MLS in 2011 sold for $1.359 Million. It was a 4 bedroom 3 bath home with 3,241 sq ft of living area and had a nice view of Deep lagoon canal.  We found another home at the end of Cypress Lake Cir that sold for $1.31 Million which is a riverfront view home and features 4,430 Sq Ft of living area and 5 bedrooms along with 5 baths and 2 half baths, also shown above.

Canal Front Home Town & River
Town & River Canal Front Home

The home pictured above is a canal front home just seconds to the river and has 3,921 sq ft of living area.  This home sold in 2011 for $1.275 Million.

On the other end of the spectrum we just closed a home for $260,000.  The home is lakefront and featured 4 bedrooms, 2 ½ baths and a pool with a metal roof.

Lakefront Home in Town and River Fort Myers
Lakefront Town and River Home Closed in 2011

Currently homes are priced from $171,000 to $1.695 Million.  We found 21 homes actively on the market and 2 pending sales.  So far in 2011 our MLS shows 29 sales from $100,000 to the $1.359 Million sale we reported earlier.

The lowest priced home in Town & River listed for $171,000 is a 3 bedroom 2 bath home built in 1978 and features a pool, corner lot, and is also located on the lake.

If you’d like to search for Town & River homes you can do so on our website www.townandriver.net or search all MLS listings at www.LeeCountyOnline.com

Watch our September 2011 SW Florida Real Estate Market Report Video

SW Florida September 2011 State of the Real Estate Market Report

Higher Priced Foreclosures on the Horizon

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We’ve been saying for months the next round of foreclosures to hit the market may be higher priced than recent rounds.  Testament to that fact one just arrived today for over $1 Million.  We are expecting another $1 Million+ property within a few weeks on Captiva Island as well.  To date banks have cleared out many of the vacant investment properties that were built as part of the boom back in 2004-2006.

Front of Bayfront Home
Bay front Home Bonita Springs Florida

The higher priced properties tended to cater to wealthier borrowers who perhaps lived in the home, at least part time, and could afford to ride out the bad economy longer than investors who ran for the hills when values turned upside down and were over extended.  While higher priced borrowers too may well have been over-extended, many had the wherewithal to ride it out, but their days have also been numbered.

Bay View Bonita Springs Home
Bay View Home

Case in point is our newest listing, which is a spectacular bay front home in Bonita Springs.  It is a 2 story home and features an elevator, a large black pool, a Viking grill on lanai for superb outdoor entertaining, and a gourmet kitchen with all the extras.

Outdoor Lanai and Pool
Outdoor Lanai and Pool
Gourmet Kitchen
Gourmet Kitchen

Every bedroom features a bay view.  The property has 2 docks both with boat lifts, a 3 car garage, and wide open views from the family room.  The property is located at the end of the street on a cul-de-sac so the home is essentially at the end of a peninsula.  The property is very private and is an entertainers as well as a boaters dream home.

Entertaining Area Upstairs

The home was purchased for $2.25 Million in 2007 and is now on the market at $1.51 Million.  The home has 3 bedrooms and a den along with 3 full baths plus 3 half baths. The home has 5,124 Sq Ft of living area.  Click to view the home online or take a Virtual Tour.

We’ve seen a concerted effort by banks to avoid foreclosing on these expensive properties.  A few large banks have contacted us with lists of and asked us tow work with selected borrowers to sell their home short now versus foreclosing later.

Imagine that fact.  A few short years ago banks were reluctant to process and approve short sales, and now they’re coming to experienced Realtors and asking for assistance with their customers to effectuate a short sale.  Even though the banks have identified their own customers they’d like to do workout a short sale with, they recognize the short sale is a complicated process and they want experienced agents to counsel their borrowers and market the short sale to buyers.

You might ask why a bank would do this.  The answer is it’s less expensive to consummate a short sale than go through the foreclosure process paying whopping legal bills all the while the property is not being maintained.  This process leads to a deteriorating property and a lower sale later on.  Banks are simply attempting to minimize losses.

In these cases it may make sense for a buyer to consider a short sale, or one of these high end foreclosures.  If you’re finding today’s economic environment challenging, call an experienced Realtor today and learn about options you might not have even known existed.  We just might be able to help you in these tough times and help you move forward instead of looking back.

 

Insider Secrets from a Foreclosure Pro

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With foreclosures slowing down, the competition to purchase these bargains has become even stiffer.  Many people call each week hoping to land these bargain properties and few will win the prize, so we thought it might be helpful to buyers and agents alike to learn the inside secrets on being the successful bidder on these properties.

As a listing agent for many banks, we know what the banks are looking for. We speak to the asset managers.  If you follow these tips your chances will increase as not every buyer knows what the bank considers when looking at multiple offers, which many foreclosures receive.

The first thing buyers must understand is there is a lot of competition for these homes.  Typically bank foreclosures go fast, and for over asking price.  Everybody seems to want them.  So structuring your offer and submitting it correctly will increase your chances.

Foreclosure Tips From a Real Estate Pro
How To Buy a Foreclosure Chart

Keep in mind, listing agents must have all the required information, so if they ask for something upfront, they mean it.  Listing agents don’t have time to track your agent down for this info.  We attach a document to each MLS listing specifying what is required with the offer.  Make sure your agent completes every single field.  We submit offers into an online system, and if information is missing, the offer cannot be submitted.

The bank never sees your offer until one is accepted.  The listing agent must enter information into an online submission, and it must conform to what the bank asks for, and all fields must be filled out.  If a foreclosure has 20 offers, the listing agent doesn’t have time to call 15 agents and beg for information that is required by the banks online system.  Keep in mind, it takes awhile to upload 20 offers, and the listing agent may be dealing with 20 properties.

Listing bank foreclosures is very time intensive, and the listing agent coordinates everything from repairs to working out HOA fees, title issues, code violations, etc.  Providing the required information is the first step.

Secondly, consider that you’re probably competing against other buyers, and that many will be above asking price.  So how do you compete?  Consider a higher escrow money deposit, shorter closing time, and definitely a shorter inspection period.  Bank asset managers are also gauging the strength of each buyer, so you want to put your best foot forward in hopes of getting the property.

Banks are on the lookout for buyers tying up properties then using contingencies to escape later.  Banks want solid deals, so you want to dress up your offer to make you look like the best buyer in the batch.  The price will be close to asking price or above because it’s a deal anyway, so you have to compete in other ways.

In many cases banks will counter multiple offers with highest and best.  Buyers are shocked when the bank doesn’t and just accepts one offer, so it always pays to pony up early on and go for it.  If you do get a highest and best form, assume the other buyer wants it as bad as you do, and act accordingly, because if you don’t, chances are you won’t end up with the home.

Be careful that your offer is written well and clearly states all fees and costs.  It is difficult to impossible to make changes later, and it could cost you the home.  Any change to the contract later on opens up the possibility the home goes back out for rebid and you could lose it, so it pays to write offer correctly the first time.  Same applies with names; make sure everyone who wishes to take title is on contract from beginning. You may not be able to add names until after closing, which could require new title insurance and additional fees.

If you’re purchasing as an LLC, make sure you provide documents upfront that you’re authorized to sign for the LLC.  The bank will ask.

These are some very useful tips by an experienced foreclosure agent. Each bank has their own rules, so be sure to follow directions well.  Make sure you’re working with an agent who understands contract language. Many times we see financing contracts that don’t match up or specify some costs buyer is not allowed to pay under the buyer’s financing program, and the offer cannot be presented to bank until language is cleaned up which could cost the buyer the sale because of delays.  Be sure to work with an agent who has experience writing clear and concise contracts and understands financing in and out.

Following these tips will increase your chances, and ignoring them will most assuredly have you scratching your head wondering why the bank selected another offer.  Good luck and happy house hunting.

 

Sales Decline as Listing Inventory Falls in SW Florida

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As you can see from the SW Florida Sales chart, SW Florida single family homes sales have been somewhat seasonal the past few years with sales peaking around April and declining after June or July.  Although it’s too soon to tell, early indicators tell us 2011 may repeat recent history as pending sales are trending even with last year and closed sales have begun their descent.

Single Family and Condo Sales in SW Florida
SW Florida Real Estate Sales 2010-2011

Even more importantly this year may be the lack of inventory compared to previous years.  We’ve seen a major decline in inventory in recent years.  Currently single family inventory stands at 6.89 months supply, but even that number is a little high because many of the short sales are tied up and not closing.  In fact, last month only 13.8% of the pending short sales closed which is much lower than traditional pending sales.  It’s unreasonable to think all pending sales will close, but 13.8% is practically nothing.

If we took out active short sales from the equation, the month supply of inventory would be lower.  I believe the month supply of inventory is deceiving as many homes on the market aren’t really on the market as they’ll never close.

As you can see from the listing inventory chart, it’s really come down in the last 18 months.  Lehigh Acres inventory is below 1,000 homes for the first time in years. Of the 975 homes on the market in Lehigh, 470 are short sales and 117 are bank foreclosures.  60.21% of all homes on the market in Lehigh are distressed, and last month 63.06% of all single family sales in Lehigh were distressed.

Single family and condo listing inventory in SW Florida
SW Florida Real Estate Listing Inventory August 2011

Cape Coral and Fort Myers inventory has come down too however the ratio of distressed sales is much less.  For instance, Cape Coral distressed inventory now stands at 44.15% compared to 60.21% in Lehigh.  Fort Myers distressed inventory stands at 37.18%.  On the closed sale side, Cape Coral distressed sales were 50.51% last month and Fort Myers distressed sales were 42.97% last month.

Buyers are finding they just don’t have as many choices today.  They love the prices, and they realize homes priced $150,000 or less have seen rising prices, but they’ve been increasingly frustrated by competing with other buyers with multiple offers, or long wait times on short sales.  This is just all part of the SW Florida housing market and it may last another few years.

Foreclosures will run their course in due time assuming the economy picks up in the next few years, but short sales may remain for awhile until prices return to points where a seller can afford to sell.  We see increasing prices in the low to moderate end going forward; however we don’t envision a return to 2005 levels.  The market has reset and people are accepting the new reality of the market.

This is good news for the younger generation as they’ll be able to purchase the American Dream and not be saddled with debt their parents have endured.  It’s a fresh slate and we can only hope generations going forward can study the past and learn from it.

While we believe buying real estate today may be a great investment long term because eventually prices will rise, we also recommend buying a home that suits your needs versus focusing strictly on investment potential.  Investment potential is what caused so many people to buy into the last market frenzy and some forgot the whole purpose of buying real estate is to fulfill a need, especially if it’s your primary home.

If you’re buying a second home or investment home, there are some factors to look for that may assist you in making the best decision for you.  Real estate can be a good investment, and it helps to clearly define what your goals are and think long term.  If you’re buying a primary residence, it’s rarely a good idea to buy solely on investment potential if you don’t like the home or it doesn’t meet your needs.  Plan B is always to keep it awhile longer until the market works in your favor, and if you’re unhappy with the home, that’s harder to do.

It is a good time to buy, so if you’re in the market, seek professional advice on current market conditions, and put your best foot forward.  Don’t be afraid, be informed. Call us at 239-489-4042 if we can help.

 

Distressed Sales in SW Florida Making a Comeback

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As you can see from the attached chart, the percentages of sales that are distressed are rising once again.  This isn’t necessarily a bad thing as we believe banks should actively work with sellers to allow short sales rather than going through an arduous and costly foreclosure process that ties the home up for months or years.  If the homeowner simply cannot afford to stay in the home and all other realistic options have been exhausted, banks should assist in allowing current homeowner to sell to someone who can afford and wants to be in the home, and everyone wins including the neighborhood.

Distressed Sales Chart for Greater Fort Myers, Cape Coral Florida
SW Florida Distressed Sales

Official sales numbers will be released after we write this article.  Our internal market research suggests sales will fall in July compared to June by about 216 +/- homes and median prices will fall slightly as well.  This may be a function that foreclosures made up a larger portion of the distressed sale pie than in previous months, signaling short sale percentages declined versus foreclosures.

Banks are beginning to release more foreclosures as they’ve turned a corner in the legal battle when they went back and cleaned up the process to file foreclosures.  We all knew there would be some pent-up foreclosure supply, but nothing along the lines of 2008-2009 foreclosure filings.

Cape Coral saw almost a 5% increase in distressed sale percentages while Lehigh Acres was up about 3%.  Overall sales were down in Lee County, but the breakdown of the sales was leaning more towards distressed sales.  County wide distressed sales equaled 48.82% of all single family home sales in July, up from 44.57% in June.

Contrast this with listing inventory in Lee County and you would think there would be upward price pressure as inventory levels dwindle.  It’s fascinating to watch the economic dynamics in play.  A similar analogy might be predicting hurricane’s forecast trajectory plot and intensity.  A storm can be influenced by dry air, low pressure, ridges anticipating forming at a certain time and point, and so forth.

Single Family Listing Inventory Fort Myers- Cape Coral
SW Florida Listing Inventory

Forecasting the SW Florida housing market has similar variables influencing the market.  We have banks processing foreclosures as fast as they can, banks willingness to accept short sales, traditional sellers moving up, down, or not at all depending on how much they owe and their job security, and the overall job market.  Are jobs moving into the area or out of?  When will the economy improve?  Interest rates and insurance costs also influence affordability and motivation for buyers.

Predicting the housing market would be so much easier if you could accurately predict each individual variable.  Since we cannot, all we can do is monitor local and sometimes world events and report on how they are affecting the real estate market.  In past articles we’ve talked about the effect of United States debt on interest rates.  We’ve talked about the price of oil’s effect on the economy, and housing supply issues.

As we enter an election year, hopefully the focus will be on the economy and jobs, and if Washington gets out of the private sector’s way and allows it to grow, maybe, just maybe, we’ll see a positive influence on several variables that influence our local real estate market.

 

How Will US Debt Downgrade Affect Local SW Florida Real Estate Market?

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Because this is the first debt downgrade from AAA for United States Debt we are entering unchartered territory, but we can offer some clues on what to watch out for and how this could affect Main Street going forward.

Nobody I know would say a downgrade to US debt is a good thing; however there may be a silver lining after all.  First off, the downgrade was inevitable.  S&P telegraphed this downgrade and stated so much when they announced it would take $4 Trillion in deficit cuts to protect our credit rating.  Congress finally sent a bill promising around $1 trillion in cuts now, and other unnamed cuts later on.  The reality is we cut about $21 Billion from this year’s budget, which is at a deficit of around $1.6 Trillion, so it’s really a drop in the bucket.  We just added over $2 Trillion to the debt to get us through the next election.  Wall Street is concerned Washington isn’t serious about cutting costs, and who could blame them with fuzzy math like this?

10 Yr US Government Bond Yield Chart
United States Government Bond 10 Yr Yield

The blame game has begun with Democrats blaming the Tea Party for the downgrade.  This is kind of funny as it was the Tea party that pushed for cutting costs, something Standard and Poors said was necessary to protect the US credit rating.  So Congress dropped the ball and blamed the only people working towards a solution to protect our rating.  Washington doesn’t get it, and now they’re in recess.  The world gets it and they realize we’re flat broke.  We’ve spent and borrowed beyond our means and nobody wants to pay the bill.  Unless we change, we’re in for more downgrades.  Even Republicans have said “The Tea Party Won.  They changed the conversation from automatic debt increases to deficit reduction.”  And this is the problem with Washington.  It’s all talk.  They cut nothing.  All they did was change the conversation, and somehow that’s good enough for Washington.  This is the way it’s always been and that’s not good enough anymore.  Our debt is being downgraded.

Now, here comes the silver lining for local real estate.  Don’t take this as good news, because it’s not, but it’s not all bad like you hear in the media.  When there is uncertainty in the market, which there clearly is right now, investors seek a flight to quality, which has traditionally been the US debt.  We look good compared to many nations’ debt, so we’re still considered a leader, but our days are numbered.

Part of the flight to quality in uncertain times is seeking out tangible assets that have a value behind them.  Obviously one is gold, and another is real estate.  The difference is gold is just gold, but you can rent out or live in real estate.  You can actually derive an income from real estate.  Both can go up and down in value, but only one can provide a yield while you wait.

The other silver lining is investors worldwide have flocked to the 10 Yr Treasury note, as this is safer than the 30 Yr bond.  Today’s mortgage rates are closely tied to the 10 Yr note Vs. the 30 Yr bond, and as investors seek safety, the yield is going down making mortgages more affordable, for now.  30 Yr interest rates are down today to 4.375% with no points.

There is a hidden double whammy working in the real estate market’s favor right now.  Wall St is skittish, and this could all change on a dime.  The final silver lining could be that the S&P downgrade was a shot across the bow of politicians.  Perhaps if the American people speak out and tell their politicians we cannot continue living this way, they’ll have the political will to make necessary cuts.  America is still a great country, we just spend too much.  We have an opportunity to make these cuts voluntarily now, or we can wait until the markets do it for us like with Greece.  There were riots in Greece as the public wasn’t ready for the tough choices.  Let’s hope the American people are ready today and send that message to their politicians so we don’t have tough choices Forced upon us later on.

In the meantime, take advantage of low interest rates, low prices in Florida, and watch to see if investors take money out of the stock market and invest in real estate markets across the US.  Median prices have risen 30% locally, and with any luck we can keep that trend going. Of course, with any luck, Congress and the president will pass a real budget that pays the bills.  We can always hope, and maybe, just maybe, this downgrade will wake people up and address a situation that has gone unchecked far too long.  If not, there’s always church on Sunday.  Maybe that’s what they meant regarding separation between church and state.  And if that doesn’t work, watch where the smart money goes.

Washington may not be smart right now, but the money always finds the way.  Let’s just hope the money stays in the US and we remain relevant.  Stay tuned.

 

SW Florida Real Estate Prices Holding Steady

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Median single family home prices increased slightly in June rising 1.91% from $114,900 in May to $117,100. The 2nd qtr of 2011 was the 3rd highest on record trailing only 2010 and 2009. Inventory levels have been falling and median prices have been rising.

Median Southwest Florida Real Estate Sales Prices
SW Florida Real Estate Prices 2009-2011

Perhaps the most often asked question is, if prices have risen 30% since January, does that mean all prices have risen that much? The answer is unfortunately not. The official number is simply a median price, which means half the sales occur over $117,100 and half under that amount.

Foreclosures have dried up which has taken many sales away at the lower end of the spectrum. While this does alleviate some pricing pressure to the downside, it doesn’t automatically make higher priced properties worth more. Supply, demand, and economics dictate that. In addition, of the foreclosures we are seeing hit the market, some are at the upper end of the spectrum.

Currently we have 2 properties pre-listed that will be well over $1 million. One is a large home near the end of Captiva Island, and the other is a 5,500 sq ft bay front home in Bonita Springs that features an elevator, pool, 2 docks, and much more. While you would think these eventual sales would pull up the average price, keep in mind they are only 2 sales out of over 1300, so they don’t influence the median price as much as they would the mean average price.

Interest rates may begin rising with the uncertainty over the United States credit rating. Inevitably it looks like Congress will fail to adequately address the root cause of our debt crisis and will place bandages over gaping wounds and $54 Trillion of unfunded debt which will not settle the credit markets long term. What we see today is all political posturing and kicking the can down the road, all the while Medicare may be broke in 6 years and not there for anybody.

It just seems funny that we’re hemorrhaging $1.6 Trillion dollars this year alone which equates to us losing $4.38 Billion every single day. Congress has been talking about cutting between $1 Trillion to $2 Trillion dollars out of deficit over 10 years in return for raising debt ceiling $1-2 Trillion dollars. So in other words, we’ll reduce our deficit about $100 Billion each year for 10 years while we increase it that much today, and it will only carry us through 6 months. The deals pay off nothing and we’re nowhere close to a balanced budget, let alone paying off any of the debt. I think if the American people realized what Congress and the president are really doing, or not really doing they’d demand some action. We’re not really doing anything until we begin balancing our checkbook and paying off some of the debt. Until then, we’re making it worse everyday.

For every 1% increase in interest rates it robs borrowers 9% in purchasing power. Let’s say you were going to buy a $100,000 property today but waited and rates shot up 1% due to a downgrade in US debt. For the same money you would now only qualify for a $90,000 home, which is not good because prices have been going up and you’re still paying the same monthly payment for less home. That’s assuming you can even find a home for 9% less money that meets your needs and isn’t gobbled up by investors. It’s getting tougher for first time home buyers on every front to purchase a home, from banks lending money, to interest rates, decreasing selection, etc.

This whole debt crisis and the excuse of a US debt downgrade is a farce. The credit agencies will downgrade us anyway even if we continue to keep raising the debt ceiling unless we get our fiscal house in order. It’s kind of like a family that agrees to take on more debt. If you take on too much, your credit rating will suffer. So don’t let the politicians fool you that they’re making significant cuts or we need this to avoid default and protect our credit rating, because that’s just Washington speak.

Housing has come under enough pressure in recent years without politicians devaluing our property values because they can’t agree on a budget. Prices have been rising in SW Florida, which is good for a change. Let’s keep the positive momentum going!

Banks Revving Up For More Short Sales

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Banks Revving Up For More Short Sales

Because Bank of America is the largest servicer of residential loans in the United States, it seems quite reasonable they would have the largest number of foreclosures and for a few years that was true. A few years ago Bank of America announced it was stepping up its efforts to assist homeowners with short sales in hopes of decreasing the amount of foreclosures. It takes time to ramp up, hire, and train enough people to lighten that load, and it used to be said that Bank of America was the worst at processing short sales. That can’t be said any longer as they actually closed more short sales in 2010 than foreclosure sales, and since they automated and moved their short sale process to Equator, an online sales management software tool, the process has become streamlined and much quicker.

No, we didn’t say Ecuador, a country in South America. We said Equator, an online tool qualified agents can become certified in to assist homeowners complete sales transactions. Not every agent will handle a short sale, nor should they. A short sale is a very complex transaction where the bank, or banks, asks for specific documents to help them make a decision on whether to accept less than the full mortgage payoff.

Banks Revving Up For More Short Sales
SW Florida Listing Inventory

This is a very complicated process because there are tax implications for some homeowners and investors, and the banks may sometimes ask for deficiency judgments in others. It gets really complicated when 3rd party liens are placed on the property, like HOA liens or judgments against the creditor. These must all be identified and negotiated as part of the process.

Listing agents are reticent to list these properties as they are more time intensive, and there is no guarantee the bank will agree to a short sale. Further complicating the process, the bank surely won’t agree unless every I is dotted and T crossed to satisfy their guidelines. This generally requires a hardship letter explaining why a short sale should be considered, a letter of authorization authorizing the agent to deal with all the various debtors and lien holders, bank statements, etc. Short sales also take time, as you may be dealing with a primary lender, the investor behind that loan, FNMA, a PMI company, and perhaps a 2nd loan and investor or a home equity line of credit.

Buyer agents are also reticent to show short sales as they’ve discovered some sellers are not a candidate to sell short, or the listing agent isn’t qualified to take the sale to closing. The short sale isn’t a sale to practice on, it must be done by skilled, tireless agents with experience and extensive training with the banks. If you’re a short sale seller, be sure to interview your agent and make sure they are a CDPE (Certified Distressed Property Expert) or similar designation and have lots of experience working with different banks. Wells Fargo, Bank of America, Nationstar, BSI Financial Services, ASC, and others use Equator and expect the agent to be qualified on that system. Others, like Aurora, SunTrust, Ocwen, etc. use their own proprietary system to consider a short sale and the agent must know how to reach each and identify what each lender requires. Ideally this information should be obtained at the time of listing, not when a contract is accepted as this will further delay the process. Learning on the job isn’t a great option for buyer or seller, so working with a listing agent who has experience closing these sales helps all.

Banks today are even reaching out to agents asking to help with our short sales. Two of the largest banks are sending their customers letters on how they may be able to short sale rather than lose their property to foreclosure and they’re even recommending qualified agents to assist. A short sale is not something a For Sale By Owner can do, nor is the bank looking for that.

As you can see by the graph, approximately 31% of all single family home listings today in Lee County are listed as short sale. Listing inventory is going down, and so is short sale inventory because successful short sale closings are going up.

If you’re on the brink of affording your home or property, talk to a short sale expert. It’s amazing that of the foreclosures, 71% of the homeowners never reached out to anyone for help. Help is available, and a short sale is much better on your credit. With banks today getting better at the short sale process, it pays to ask for help. Call your agent today and ask if they can help. If not, don’t hesitate to call us and we’ll see if we can get you help now so it’s not a crisis tomorrow.

The Ellis Team currently has 3 CDPE’s on staff. A CDPE is a Certified Distressed Property Expert, which requires intensive training and extensive short sale experience to attain. To help gear up for the increased short sale demand, the Ellis Team at RE/MAX recently hired Marisa Morgan who worked many years as a long time banker with Bank of America and also in the title business. For years Realtor clients came to her asking advice on how to properly package short sales so the bank would accept them. She sat down and met with several sellers so they understood the process, so it makes sense to add Marisa’s experience to SW Florida’s premiere team to help sellers sell their short sale properties.

Brett discusses short sale issues with Marisa on this week’s Future of Real Estate show entitled “Banks Gearing Up for More Short Sales in Fort Myers, Cape Coral, SW Florida” Video.